8/9 Webinar: Preserving Affordability in Location-Efficient Areas

Join us on Tuesday, August 9 from 12 - 1:00 pm ET (9 - 10:00 am PT) to learn how local governments can work to preserve housing affordability near transit, employment centers, and other location-efficient areas. This session includes an overview of demographic trends nationwide and in the national capital region, and an overview of policies and strategies that can be used to preserve and expand the supply of affordable housing in "hot" neighborhoods.

This session is presented as part of the Live at the Forum Summer Series: Sustainable Development in the National Capital Region, a three-part webinar series highlighting exciting and innovative projects in the Washington, D.C. metro region. Learn more about other sessions in the series, which address budget-oriented development and regional coordination.

Replies to This Discussion

Transit infrastructure can be a double-edged sword. We create it to facilitate development & to assist low-income households. Yet, well-designed and well-executed transit can result in higher land prices that chase development away to cheaper, but more remote sites. And low-income households and businesses are often displaced by rising real estate prices.

Value capture techniques can help in this regard. Some jurisdictions have addressed this problem by reducing the property tax rate on building values (thereby making buildings more affordable) while increasing the tax rate on land values (thereby making land more affordable). In addition to improving housing affordability, this technique helps create jobs in construction, weatherization and makes it easier for small businesses to get started and maintain themselves because they pay less rent. For more information, see http://www.justeconomicsllc.com

Are there ways to fast-track construction of new housing units in this region specifically (as it is clear we need from Lisa's presentation) without sacrificing sustainability and location-efficiency? Which financial or regulatory barriers are a hindrance to construction in the current environment, and what can we do to overcome them?

Lisa: You mentioned delayed household formation in the DC metro area - could you discuss this a bit more? Specifically, do you think this is a response to housing costs, changing demographics, or changing cultural preferences (or all of the above)?

The changing household formation rates results from several factors, including delayed marriage and childbearing, people remaining in roommate situations longer than they wish, children living with parents, people holding off on divorce, etc. The delayed marriage and childbearing is part of a larger demographic shift that we have seen nationally (and actually in most industrialized nations) and is related to increased education and labor force participation of women. We have the highest levels of education and labor force participation rates among women comapred to other metro areas. As such, we have seen delayed marriage and childbearing here, like in many other places. This delayed marriage and childbearing actually changes the types of housing people demand, as well as the overall number of units demanded. (Two single people need two houses, so marriage actually reduces the demand for housing.)

The other factors--remaining roommates, adult children living at home, holding off on divorce--are phenomena that we saw more of when housing prices and rents skyrocketed. People who wanted their own place couldn't afford it. Now, the economy and the uncertain job market in many places and for many groups--like new college graduates, people with less education--creates a situation where people who would otherwise have their own house or apartment are staying "doubled up."

The property tax on building values is typically 1% or 2% of value. However, unlike a sales tax which is paid only once, a property tax is paid each and every year that an improvement adds value to a property. Using a net present value calculation, the property tax on buildings has the economic impact of a one-time sales tax of between 10% and 20%. That's a very substantial barrier to affordable construction, improvement or maintenance. Some jurisdictions have addressed this problem by reducing the property tax rate on buildings while increasing the tax rate on land values. These jurisdictions don't lose any revenue, but the incentives for affordable construction, improvement and maintenance are enhanced substantially.

Thanks for your post -- your website includes a variety of different tools and information on how they might be applied. I just read the information on the split tax structure you describe above. Pittsburgh sounds like a great case study for further investigation. Thanks.

Of course, not every VA jurisdiction that works to ensure affordable housing has the same challenges and opportunities as we face inside the Beltway.

Still, over time, Northern VA and other more compact, urban communities have demonstrated the need for tax credit criteria to reflect both the unique costs and benefits associated with location-efficient projects and other smart growth best practices.

I know due to time constraints you focused on programs in Arlington. Would you be able to provide a couple of examples of projects (perhaps just links?) to programs or projects in DC and Maryland? Thanks!

One great resource for looking at projects in Montgomery County is this presentation that focuses on its local housing trust fund; it includes a number of case studies and shows the impact of having a local source of funds to help with AH gap financing.

And here are a few projects from the District of Columbia (beyond their housing authority portfolio):

Both Montgomery County and Fairfax County have inclusionary zoning policies that are able to achieve deeper income targeting by enabling the Counties to purchase some of the affordable units and rent them out to very low- and extremely low-income households.

Thanks for today's session! I was watching the webinar with other members of the DC Preservation Network, which meets monthly to discuss strategies for preserving affordable housing in the District of Columbia. We all found the presentations very informative.

We did have some discussion afterward, however, regarding shared-equity homeownership, which was one of the solutions for preserving affordability that was mentioned in the webinar. Such programs are controversial for some, and a few members of our group expressed serious reservations about their fairness and feasibility.

I know that you didn't have time to discuss all of the solutions in detail, so I wanted to draw your attention to some recent research by the Urban Institute on seven shared-equity homeownership programs around the country. The UI researchers found that these programs succeeded in giving homebuyers competitive returns on their investment while still retaining affordability over time. There’s more information on our web site at http://www.urban.org/sharedequity/